Dependent Eligibility Audit Launches As Cost Containment Strategy

As health care costs continue to increase, UNM's Division of Human Resources is searching for cost saving opportunities to avoid or mitigate the need for cost cutting actions such as benefit reductions and employee contribution increases. One cost saving opportunity that many employers are taking advantage of is dependent eligibility audits.

DEAs are designed to identify, report and disenroll ineligible dependents from an employer's medical plan. Examples of ineligible dependents are former spouses, married children, over-age dependents and unrelated individuals. Three to eight percent of enrolled dependents in a typical employer's medical plan are ineligible for coverage. With an average annual medical plan cost above $3,000 per dependent, the financial impact of these ineligible dependents is significant.

UNM began self-funding its active employee/retiree under the age of 65 medical plan in 2009. As a self-funded plan, UNM funds all claims costs, although third party administrators such as Lovelace and Presbyterian process the claims and payments. As UNM strives to rein in health care costs, we must look for opportunities to ensure the viability of our medical plan and minimize rate increases to employees.

UNM contracted with Healthcare Analytics, a division of Gallagher Benefit Services, to perform a confidential DEA for its self-insured medical plan. Although we believe the majority of enrolled dependents meet eligibility requirements, in some instances a plan participant may mistakenly include an ineligible dependent. When this happens, each of us shares the cost.

The audit is projected to take 24 weeks to complete. A letter will be mailed to the homes of employees with dependents in late September. We will share information as we receive updates from Healthcare Analytics about the timing of the audit and documents that will be requested from employees.